prpri Mens Rea in Taxation Offences Mens Rea in Taxation Offences

In Union of India v. Dharmendra Textile Processors, the question was raised about necessity to establish “mensrea” in taxation in offences. The matter was transferred to larger bench for judgment.

“Mens Rea” literally means a guilty mind. It is a cardinal principle of English Common Law is that a persons cannot be convicted and punished in a proceeding of a criminal nature unless it can shown that he had a guilty mind. The principle is self explanatory. A person should be punished for deliberate defiance of law, rather than something which didn’t do intentionally or something which happened accidently etc. Nevertheless, the principle is most misunderstood.

In certain offences, called statutory offences, it is argued that mens rea is not required. It is also argued that taxation offences are statutory offences, and hence mens rea is not required. Supreme Court, High Courts and Tribunals have consistently held that mens rea is not an essential ingredient for imposing a penalty unless statute specifically prescribes so. In economic crimes and departmental penalties, mens rea is not essential for imposing penalty.

The first problem we encounter is that what is meaning of mens rea. What is “mens rea”, which is required for the act to be punishable. What is a “guilty mind”. It is seen that deliberate defiance of law is punishable. Thus mens rea means a mental state, in which a person deliberately violates a law. Thus mens rea means intention to do the prohibited act. In Allrd v. Selfridge, it was held,

“The true translation of mens rea is an intention to do an act which is made penal by statute or by common law.”

Intention to do the penal act is sine qua non for punishment for any offence, an no law seeks to punish accidental or non intentional act of any person. Section 80 of the Indian Penal code says,

“Nothing is an offence which is done by accident or misfortune, and without any criminal intention or knowledge in doing of a lawful act in a lawful manner by lawful means and with proper care and caution.”

Section 52A & Section 167 of the erstwhile Sea Customs Act made bringing into Indian Custom Waters any ship with stealth holes/chambers. The offence is the act of bringing into Indian custom waters any vassel/ship with stealth holes/chambers. Thus requirement of the offence is “conscious act of bringing a vassel with stealth hole/chamber into India”. Nothing else, like intention to smuggle etc. is required, because the offence is bringing that type of vessel in India.

In fact no sweeping generalization can be made as to what is requirement of mens rea. The fact is to read into the offence itself.

Section 11AC reads as,

“Where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of section 11A, shall also be liable to pay a penalty equal to the duty so determined :”

A plain reading of the Section suggests that various mental state is required- and that is fraud, collusion, willful misstatement, suppression, or contravention of Act or Rules and those acts must be there with “intention to evade payment of duty”. Mere non payment of duty, or mere contravention of any provision will not attract the Section.

Let us see Rule 25(1) of the Central Excise Rules, which makes following act punishable:

“removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules”

Say a person removed any excisable goods without making an invoice. Can he claim that there is no intention to evade payment of duty, or it was bonafidely done. No. The offence is simple- removal of any excisable goods in violation of provisions of the law. Mere conscious act of such removal is punishable. No other mental state is required to be proved. However, such removal must be intentional- and not accidental- although the provision does not say so explicitly.

Say for example there is a fire in a factory. To save the finished product the manufacturer removes the goods outside factory, without making invoice. Whether the act is punishable- No. Why? Because the act of such removal is not deliberate, it is done to avoid a greater harm. That is what mens rea is. We have look at the definition of the offence and see whether the act which has been made punishable has been done deliberately or not. No other requirement can be added in the section in the name of mens rea.

When we will see the offence under Clause (d) of Rule 25, the provision says- contravention of any provision with intention to evade payment of duty”. Thus a mental state of intention to evade payment of duty is required to be established before any person can be penalized under this sub clause.

Thus mens rea refers to mental state of doing the prohibited act deliberately. In the name of mens rea additional ingredient cannot be added in the definition of an offence. At the same time in the name of “statutory offences”, no ingredient of the offence can be deleted from the definition of the offence.

In India all offences are statutory, and the genral law as to crimes are codified in the Indian Penal Code. Definitions of crimes in various sections of the code contains specification of the mental state which is required to established as a necessary constituent of crime. The genral view having regard to the scheme of the code is that the maxim “actus non facit reum nisi mens sit rea” has no application to offences under the code. When the principle of mens rea is not applicable to criminal offences, it cannot be imported into taxation offences. The only thing which is required to established is “deliberate act or omission prohibited by law”. Mens rea is nothing but intention to commit the prohibited act.

Written by:- Advocate Rajesh Kumar. The author can be contacted on The author can be contacted on , Web:

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August 2021